Witte’s monetary reform: the gold standard of the ruble

Witte's monetary reform: the gold standard of the ruble

Thanks to the monetary reform of 1897, carried out by the statesman of the German-Baltic family, Sergei Yulievich Witte, the Russian ruble became one of the stable currencies of the world economy. Witte’s monetary reform, which established ruble gold monometallism or the free exchange of the ruble for gold (the gold standard of the ruble), contributed to Russia’s economic growth.

Preparations for monetary reform began in the 1880s and was caused by the instability of the country’s monetary system. In February 1895, the Minister of Finance S. Yu Witte presented a report to Emperor Nicholas II on the need to introduce the circulation of gold. Witte decided to introduce the gold ruble pattern, adopted in England, and not the gold-silver pattern, adopted in France.

The minister of railroads Witte was named minister of Property in 1892, where he was during 11 years. Witte did not immediately approve the financial policy of his predecessor AI on the introduction of the gold standard. The eminent scientist Vyshnegradsky, convinced of the success of the reorientation of the circulation of money from Austria-Hungary towards gold, invited Russia to the initiator of this transition, the financier Adolf Rothstein. Later, Adolf Rothstein assumed the position of director of the International Commercial Bank of St. Petersburg (1896-1904) and became a confidant of Witte.

Witte’s main task was to decide which way to carry out monetary reform: to follow a course towards gold monometallism or bimetallism, using both gold and silver. At first, Witte leaned towards the second option, because Russia is accustomed to the circulation of coins of different metals and silver reserves have accumulated in huge amounts. But he understood that there is a risk of decreasing the value of one parity if the conjuncture of another parity increases, which will no doubt affect the stability of the banknotes supported by the two metals. Heavy everything, Witte established monometallism. Witte’s new draft on monetary reform was approved by the tsar.

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